ECON 306 Lecture Notes - Lecture 1: Marginal Revenue, Economic Equilibrium, Marginal Cost
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1 = [300 (q1 + q2)](q1) (60)[300 (q1 + q2)] 2 - q1q2 (18,000 300q1 300q2) P = 300 80 80 = . Therefore, profit is ,400 for both firms in the cournot-nash equilibrium. Given the demand curve is p = 300 q, we can calculate the marginal revenue curve to be. When total output is 120, price will be , based on the demand curve. In this case, firm 1 would produce the entire 120 units of output and earn a profit of ,400. 1 = [1500 (q1 + q2)](q1) (60)[1500 (q1 + q2)] 2 - q1q2 (90,000 1500q1 1500q2) Setting mr1 to the firm"s marginal cost (60) and solving for q1 yields: Therefore, profit is ,400 for both firms in the cournot-nash equilibrium. When the firms form a cartel, they act like a monopoly and split the output and profits. To solve this section, just find the monopoly outcome and then divide q equally between the firms.
